More on the Postal Service

One point that came up repeatedly in our discussion last night about the crisis in the postal service is that the USPS is apparently subject to a regulation that requires it to pre-pay pension and health care obligations 75 years in advance, something that is required of no other government agency. And a substantial amount of their budget shortfall is tied to that regulation.

TPM Reader SM notes these points …

As a union organizer for SEIU, I have a distinctly labor perspective on the USPS crisis; and, I think that there are two HUGE pieces of information that are often left out of the “The USPS is an aging dinosaur” narrative often perpetuated by the mainstream media.

Firstly, the USPS is subject to a regulation forcing them to pre-pay retiree health benefits for 75 years in the future. This means that they are paying for health benefits for postal carriers who haven’t yet been born. The cost of this regulation (a regulation not required of any other government or private entity) was about 5.5 billion dollars in FY 2011 and was even higher in previous years.

Secondly, the Postal Service has overfunded their pension system by about $75 billion dollars in recent years. Thus, there is money in a separate account that could more than handle the current shortfall in postal revenue ($0 of which comes from tax dollars).

Meanwhile TPM Reader DW notes the structural difficulties faced by the postal service since the USPS is mandated by law to service various localities and facets of the postal market that can’t be done at a profit …

I am a recent retiree of the USPS and have some thoughts on the Postal Service. The news blurb you read has to be viewed in the context of upcoming union contract negotiations. USPS management always makes it seem like the sky is falling right before they negotiate the contracts. That is not to say there are no problems at the post office. The truth is there is no profit to be made delivering mail when all the easily made profits are siphoned off by other package carriers. FedEx and UPS take the cream off the top, leaving the unprofitable business to the postal service which is legally obligated to deliver to every address six days a week. If anyone thinks FedEx or UPS wants to deliver packages to every house every day, they are mistaken. They do not want to waste their time driving to unprofitable rural areas or stopping at every house in a neighborhood. If the USPS disappears, I feel sorry for anyone living any distance from a large city who expects mail at an affordable rate. A lot of people don’t realize that the postal service currently delivers some packages for FedEx and UPS that would be unprofitable otherwise.

There has been a slow “privatization” of the postal service over the last few decades. I’ve always assumed it was based on a back handed way to slowly get rid of union postal workers until there are so few of them they are no longer a political force. I could give many, but one example of what I mean by “privatization” is the discount large mailers receive for presorting their mail. The postal service gives a discount of what it would cost the USPS to process that mail using union postal labor. The businesses hire a mailing firm (or do it in house) to presort their mail with labor that is paid close to minimum wage, pocketing the difference between what the postal worker makes and what the minimum wage worker makes. It’s just an example of another decent paying job being given to a lower wage non-union worker so that large businesses can pad their bottom lines at the expense of labor. An additional bonus for business and Republicans is that union postal workers eventually lose their jobs and their clout with Congress.

When an article like the one you referenced appears I am always amazed at the comment sections. The American public is always ready to jump in and say the most uninformed things about situations about which they know nothing. It always makes me realize that maybe I don’t have a complete picture or understand everything about the businesses, customs, situations, etc. that I read about and maybe I should do more research before I jump in and comment.

As a final thought, I look at the neighborhoods in my town and see 4 or 5 different trucks delivering mail and packages to each neighborhood every day. The thought of all these different trucks driving around burning fuel to go to the same houses seems ridiculously wasteful and energy inefficient to me. The USPS goes to every address in the U.S. every delivery day. Why can’t FedEX, UPS etc. handle getting the packages and mail to the cities and then have one delivery truck (USPS) make the final delivery. I can’t even begin to calculate the fuel the U.S. would save daily. I guess I’m just a pragmatic dreamer.

Having end delivery done all by the USPS doesn’t strike me as practical or preferable. But the broader points about the USPS legal obligation of universal service strikes me as spot on.